Margins are tight for new-car sales, and they’re forecast to narrow for used-car vehicles as off-lease supply swells. So where else can a dealer drive profit when variable operations are softening?
Answer: fixed operations.
There is also a sweet spot to target in fixed ops as well. NADA reports that a service appointment generates a 9% higher repair order.
Here are a few customer perceptions to remember when dealers begin to advertise the service department.
- Some customers perceive dealerships as being much more expensive than shops and auto-service chains.
- Some customers perceive it to be more difficult or complicated to get service from a dealer.
- Some consumers perceive dealer service specials as bait and switch tactics.
In the past, dealers have had a tendency to place service as a second priority over sales in terms of training and certainly advertising. When was the last time you saw an ad for a service special from a dealer compared with when you last saw an ad for Maaco, Aamco, Pep Boys, Midas, Tuffy or Advanced Auto Parts?
Let's talk about dealers advertising fixed ops. First off there are many new tools that make fixed-op advertising effective and affordable. Timing and geographical focus are important to keep in mind.
A start is geo-marketing to high-value zip codes. Imagine a dealership’s $29 oil-change deal popping up on someone’s smartphone when that person Googles “Honda repair” or watches a YouTube video featuring a Honda models.
Cost-per-clicks should be second nature to dealers. It helps foster immediate profits. Being high on the organic search-results page is the mission. Some consumers go there first.
Pre-roll video (or those that play right before you watch something on YouTube) also are effective. But they need to deliver the message fast. You’ve got four seconds to grab a buyer’s attention, so get right to the value. It’s worth it because buyers watch these ads.
When car sales are hot, competitive auto-service chains see sales increases. Why? Because franchised dealers get busy selling cars and subsequently market their service department with less of a priority.
But the best way to retain sale customers is to keep them coming back for services, basic and otherwise.
And accessory sales at a 50% margin and a 50% conversion-to-sale is a no-brainer for profit building.
How to get started? Have an audit of your fixed-op profit services for top-service lines in dollar value and market each as a special. Reach into your marketplace and make your store famous for simple services at great values.
If you want fixed-op growth, go after it with advertising. Market your most popular value-driven services. Consumers will respond with their money. Franchised dealers sell the vehicles. They shouldn’t stand by while non-dealers fix them.
Adam Armbruster is a senior partner in the business growth firm Eckstein, Summers, Armbruster & Company located in Red Bank, New Jersey and can be reached at 941-928-7192.